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Valuing Vineyards: A Directional Distance Function Approach

Published online by Cambridge University Press:  28 June 2013

Robin Cross ,
Rolf Färe ,
Shawna Grosskopf  and
William L. Weber
Robin Cross
Affiliation:
Department of Agricultural Economics, Oregon State University.
Rolf Färe
Affiliation:
Department of Economics and Department of Agricultural Economics, Oregon State University.
Shawna Grosskopf
Affiliation:
Department of Economics, Oregon State University.
William L. Weber
Affiliation:
Department of Economics and Finance, Southeast Missouri State University.
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Abstract

We exploit the duality between the cost function and the directional distance function in value space to recover hedonic prices of product or asset characteristics. An application is offered for 96 Oregon vineyards located in the Willamette Valley of Oregon that sold between 1995 and 2007. Specifically, we recover hedonic prices for the number of high-, medium-, and low-quality vineyard acres and the number of nonvineyard acres sold in the parcel. Not surprisingly, higher-quality vineyard acres have a higher estimated hedonic price than medium- or low-quality acres, but as the number of high-quality acres increases, the hedonic price falls. (JEL Classification: D24, C61, Q10)

Keywords

Hedonic pricesdirectional distance function
Type
Research Article
Information
Journal of Wine Economics , Volume 8 , Issue 1 , May 2013 , pp. 69 - 82
Copyright
Copyright © American Association of Wine Economists 2013 

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